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What is the global economic outlook ?

What is the global economic outlook ?. Paris, 6 May 2014 Angel Gurría , Secretary - General and Rintaro Tamaki , Deputy Secretary -General and Acting Chief Economist. Growth in advanced economies is rebounding…. Real GDP growth Per cent.

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What is the global economic outlook ?

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  1. Whatisthe global economicoutlook? Paris, 6 May 2014 Angel Gurría, Secretary-General and Rintaro Tamaki, DeputySecretary-General and Acting ChiefEconomist

  2. Growth in advanced economies is rebounding… Real GDP growth Per cent Source: OECD May 2014 Economic Outlook database.

  3. … driving a strengthening of global growth Real GDP growth Per cent Source: OECD May 2014 Economic Outlook database.

  4. Some of the stalled cylinders of growth are starting to fire again Fixed investment Volume index, 2007 = 100 Trade in goods and services Volume, year-on-year percentage change Source: OECD May 2014 Economic Outlook database.

  5. Financial conditions are facilitating faster growth OECD Financial Conditions Index (FCI)1 Bank lending rates for European companies1 3-month moving average, per cent 1. The FCI takes into account interest and exchange rates, credit condition surveys and household wealth. A unit increase raises GDP by ½ to 1% after 4-6 quarters. 1. Rate on new loans to non-financial corporations (all maturities), except for Greece (up to one year). Source: OECD May 2014 Economic Outlook database; OECD calculations Source: ECB MFI interest rates.

  6. Drag from fiscal consolidation in the United States and the euro area is diminishing Consolidation effort Change in underlying primary balance1as per cent of potential GDP 1. Budget balance excluding interest payments and adjusted for the economic cycle. Source: OECD May 2014 Economic Outlook database.

  7. Unemployment is falling, but from high levels, and the euro area is lagging Unemployment rate Per cent Number of unemployed persons Millions Source: OECD May 2014 Economic Outlook database.

  8. RISKS

  9. Falling inflation in the euro area points to increased deflation risks Euro area headline inflation1 Per cent Inflation expectations in the euro area From inflation swaps; 10-day moving average, in per cent 1. Year-on-year change of harmonised index of consumer prices. Source: OECD May 2014 Economic Outlook database. Source: Datastream; OECD calculations.

  10. Credit has grown quickly in some EMEs, increasing financial vulnerabilities Credit growth to the private sector1 Per cent Selected shadow banking products in China Per cent of GDP Source: CBRC; Kwan (2014); National Bureau of Statistics of China; and China Trustee Association. 1. Average annual growth between end-December 2006 and end-September 2013. Source: BIS; OECD calculations.

  11. POLICY REQUIREMENTS

  12. United States: gradually reduce monetary stimulus, strengthen active labour market policies Household consumption Volume index, 2007=100 Employment and labour force participation Per cent of working age population Source: OECD May 2014 Economic Outlook database.

  13. Euro area: monetary stimulus needed alongside banking system repair Unemployment rate Per cent Bank credit to non-financial private corporations Percentage change1 Note: February to February for Italy. 1. Adjusted for loan sales and securitisation. Source: OECD May 2014 Economic Outlook database. Source: OECD May 2014 Economic Outlook database.

  14. Japan: continue with monetary easing and fiscal consolidation, launch 3rd arrow (structural reform) Core inflation1 Per cent Gross government debt Per cent of GDP 1. Excluding food and energy. Source: OECD May 2014 Economic Outlook database.

  15. Reforms are needed to address the scars from the crisis and boost growth Estimated effects of the crisis on potential per capita output of OECD countries Percentage deviation from pre-crisis scenario1 OECD structural unemployment Per cent of labour force 1. In the counter-factual baseline, productivity growth continues at its 2000-07 rate and structural unemployment and participation rates remain at their 2007 levels. Source: OECD May 2014 Economic Outlook database; OECD calculations.

  16. A faster pace of structural reform is needed in the BRIICS also, given the slowdown in potential growth Potential output growth Per cent . Source: OECD May 2014 Economic Outlook database.

  17. Key messages • Major advanced economies are building momentum, driving the pick-up in global growth. • Nevertheless, risks remain that could blow the recovery off course. • More ambitious structural reforms are needed to create jobs and sustain stronger growth. .

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